Wow. I cannot believe how high inflation has soared over the past few years. High inflation has been my biggest concern since we early retired.
I’ve probably written 15 posts worrying about what may happen to our FIRE plans if high inflation came as a result of the economic Pol-idiots in Washington DC.
A few favorites:
IRS Changes Don’t Keep Up With Inflation
What’s The Impact Of Inflation On Your Retirement?
How Fast Is Inflation Really Rising?
Despite my warnings, the government printed money like crazy and high inflation emerged. It soared up to almost 10% – and that’s if you trust what the government is telling us …
With this much inflation – about 8 years worth in just 3 years – my FIRE model should be BROKEN. Especially since my MegaCorp pension has a fixed benefit and I started taking it 3 years ago.
Still, I was checking & double checking our portfolio position last month – before we invested in the FL condo – and our FIRE model is definitely NOT BROKEN. Our retirement savings are doing just fine. In fact, despite the inflation, we’re probably in the best financial situation we’ve ever been in.
I know we are fortunate to be in this situation. I guess since so much of our savings are invested in US stocks and real estate, the relatively high inflation has been more than offset by our investment growth.
(It does make me feel bad for lower income and younger folks that don’t have that advantage. If most of your income gets spent month-to-month, the inflation impact is huge. They can’t ’outgrow’ the impact. As usual, the folks that Washington DC politicians claim to be helping with their “stimulus” are the ones who end up paying the biggest price.)
While we aren’t out of the inflationary woods yet, I’m feeling like we’ve pretty well beat this obstacle. Certainly, the Federal Reserve has a lot to do to get inflation back down to their 2.0% annual target (we’re currently 2.5x higher than that). Still, with how the market is starting 2024, I think our own portfolio is pretty inflation-proof in this market.
Have you been surprised with how well / how poorly your portfolio has held up during the last few years of high inflation?
Image: AI Generator Fotor; Chart – WEF
MrFireStation 
Yes. And besides equities, even fixed income and cash are solid places to save money. It’s definitely a tailwind for savers. It feels like the consensus that rates must come down from here might be overdone. We are still in the range of historic normal averages and the costs of war and de-globalization are real. I don’t think you can time the forward market on interest rates or equities.
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My wife and my retirement plan was based upon drawing down a deferred comp plan during the first ten years, dividends and municipal bond interest. We track our investment progress according to how much income our investments payout and we are up 49% over the past four years, so we are well ahead of plan.
The areas where we have seen inflation are gasoline, electricity, home owners insurance, food, and the cost of government. Funny how government which gets the math wrong when it comes to calculating inflation, seems to always find ways to take more of our income by not adjusting brackets, phaseouts and COLAs to fully compensate for inflation.
Older people who planned well, such as many who participate in your forum are doing well. However, our young people are not being given the same opportunity to climb the economic ladder that we had. Currently, housing, rents and taxes are very high for newly establishing households. I don’t see anyone but few in the Freedom Caucus who are besmirched as being extremist crazies wanting to reduce the runaway government spending. Most in Washington D.C. and many state governments don’t have a clue that deficit spending will not end well.
BiDUMB’s open border has allowed in excess of 10 Million into the USA without vetting them for their willingness to become law abiding citizens and capability of not becoming public wards. A couple evenings ago we saw a news report about illegal immigrants who are coming into the USA from the failed Communist country of Venezuela. They were openly telling the reporter that they were planning to invoke squatter’s rights to occupy vacant homes. Someone openly saying this out loud should be easily determined that they fit neither the law abiding or not becoming public ward criteria for immigration.
Here is where the combination of high inflation and the open border that is allowing Communists in does not end well. It will put a target on your forum reader’s backs while not passing the country over to our kid’s generation in the same or better condition that it was handed to us. Our forefathers warned us to avoid the type of civil serpents who now reside in Washington D.C. and our state capitals.
It is incumbent on every generation to pay its own debts as it goes. A principal which if acted on would save one-half the wars of the world. -Thomas Jefferson
To contract new debts is not the way to pay old ones. – George Washington
Think What You Do When You Run in Debt: You Give to Another Power over Your Liberty -Benjamin Franklin
The consequences arising from continual accumulation of public debts in other countries ought to admonish us to prevent their growth in our own. -John Adams
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